Understanding Taxation

Paying income tax

If you have income from salary, wages or a social welfare benefit, you must pay tax. Your tax contributions are deducted under the pay-as-you-earn (PAYE) system. This means that the pay you get in your hand has already had tax deducted.

You will need an IRD number to pay tax, click here for more information about applying for one.

KiwiSaverKiwiSaver is a voluntary, work-based savings scheme, set up by the New Zealand government, with a range of membership benefits. When you start a new job, if you're not already a member and are eligible, your employer will automatically enrol you in KiwiSaver. If you do not wish to be enrolled in KiwiSaver, you have eight weeks to opt out and have your money refunded. Your KiwiSaver contributions are deducted under the pay-as-you-earn (PAYE) system. This means that the pay you get in your hand has already had KiwiSaver contributions deducted.

Tax on bank interestYour bank will also make automatic tax payments on your behalf for the interest you earn. You must supply your bank with your Inland Revenue Department (IRD) number and the correct deduction rate to ensure that your interest is taxed at the correct rate and sent to your tax account.

Income taxes are calculated on a tax year that runs from 1 April to 31 March. The rates on personal income tax can be found on the Inland Revenue Department website: www.ird.govt.nz

Tax on investmentsNew Zealand currently has no capital gains tax, so any investments in shares, property etc are not taxed on their increase in value over time, unless they are connected to your primary source of income/occupation.

Goods and Services Tax (GST)A tax of 15% is applied automatically to mostly everything you purchase in New Zealand. It is normally included in the price that you see displayed in shops etc. If you run a business, it is likely you will need to be registered for GST. For more information click here.

Worldwide incomeIf you are a New Zealand tax resident, you will be taxed on your world-wide income. Check the IRD website for more information.

Tax Credits (rebates)Certain people are entitled to a rebate on the tax they pay at the end of the financial year. Click here for more specific information and to see if you are eligible.

For more information on taxation in New Zealand, click on the links below: